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New Cayman Islands Bill Enhances Financial Transparency in Line with Global Standards

Money LaunderingNew Cayman Islands Bill Enhances Financial Transparency in Line with Global Standards

This recently published Bill aligns with the upgraded Recommendation 24 of the Financial Action Task Force (FATF) global standards. Its purpose is to ensure that regulatory authorities have access to accurate and up-to-date information regarding the beneficial owners of companies.

The FATF, a global organization dedicated to combatting illicit activities and their societal impacts, sets the standard for addressing worldwide money laundering and terrorism financing. This Bill plays a pivotal role in upholding the Cayman Islands’ adherence to these evolving international standards.

Beneficial ownership refers to individuals who ultimately own or control a business entity. This Bill consolidates the rules regarding beneficial ownership found in the Companies Act, Limited Liability Companies Act, and Limited Liability Partnership Act into a single piece of legislation. This consolidation simplifies the beneficial ownership framework, making it more accessible for industry participants and public authorities.

The Minister for Financial Services, the Hon. André Ebanks, emphasized that this Bill strengthens the Cayman Islands’ reputation as a trusted financial services hub.

The introduction of the Beneficial Ownership Transparency Bill, 2023, underscores the Cayman Islands’ dedication to upholding evolving global standards in the fight against money laundering and terrorism financing. By enhancing transparency and ensuring access to accurate information, the Cayman Islands reinforces its position as a trusted global financial center committed to combating financial crimes. Additionally, the Bill will proactively prepare the Cayman Islands for the 5th Round of the FATF evaluation process, slated to commence in 2025.

Over the past two years, extensive consultations with industry stakeholders, the public, government partners, and international entities have taken place. Feedback gathered during these discussions played a crucial role in shaping the Bill, which has received positive feedback from stakeholders overall.

In response to the Cayman Islands’ 2019 commitment to the UK regarding the establishment of public registers of beneficial ownership information, the Bill includes a clause that empowers the Cabinet to create regulations for public access to specified beneficial ownership information. However, this move toward public access will not proceed until Parliament approves such regulations, following discussions with the UK, other Overseas Territories, and Crown Dependencies. This is in light of the landmark judgment issued by the European Court of Justice in November 2022, which invalidated public access to beneficial ownership registries in the EU due to privacy and data protection concerns.

Minister Ebanks is expected to present the Bill at an upcoming Parliament meeting in the fourth quarter of this year. If the Bill is passed, existing legal obligations will remain in effect until the new provisions are phased in. The Ministry of Financial Services and Commerce is also working on developing accompanying regulations and guidance, which will undergo consultation with industry members in due course.

 

By FCCT Editorial Team

Disclaimer: The views expressed in this article are independent views solely of the author(s) expressed in their private capacity.

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